UPDATE 3-Sallie Mae sees higher profit in 2010, stock jumps

* Sees EPS above $1.50 in 2010

* Sees lower loan loss provisions

* Shares soar as much as 28 pct
(Adds analysts' estimates, updates stock price)

By Juan Lagorio

NEW YORK, Oct 21 (Reuters) - Sallie Mae (SLM.N), the
largest U.S. student loan provider, forecast higher earnings in
2010, boosted by lower loan loss provisions and more stable
credit markets, sending its shares soaring as much as 28
percent.

Sallie Mae, whose formal name is SLM Corp, also forecast
loan losses will decline in coming quarters.

The lender estimated earnings per share would top $1.50
next year. Through the first three quarters of 2009 it lost 17
cents a share.

Sallie Mae's forecast is almost 30 percent above analysts'
estimates of earnings per share of $1.16 in 2010, according to
Thomson Reuters I/B/E/S.

The company has been hurt over the last year by disruptions
in financial markets. Its assets generate interest based on
commercial paper rates, while its liabilities are linked to the
London Interbank Offered Rate, or LIBOR.

The recent stabilization in credit markets has already
benefited Sallie Mae, helping the company beat analysts'
earnings estimates in the third quarter.

"We project chargeoff declines for the next six months,
which is the period we can see most clearly. Earnings per share
should increase through 2011," Chief Executive Albert Lord said
on a conference call with analysts.

Sallie Mae said fourth-quarter loan loss provisions in its
private loan portfolio would decline by 15 to 20 percent from
the third quarter.

The lender estimated the decline in bad loans will allot
the lender to reduce its provisions for loan losses by $300
million next year.

"The credit picture appears to be stabilizing, with
later-stage delinquencies declining," Ladenburg Thalmann
analysts wrote in a research note.

Sallie Mae also estimated operating expenses would be flat
in 2010.

The company's shares were up $2.40 or 27 percent at $11.30
on the New York Stock Exchange in early afternoon, off an
earlier high at $11.43.
(Reporting by Juan Lagorio, editing by Gerald E. McCormick and
Matthew Lewis)